Real estate swindlers should be prosecuted

Baltimore: Unscrupulous hucksters defraud homebuyers, lenders and tax authorities.

August 03, 1999

OWNING a home is a cherished American symbol of upward mobility. Yet many people are unsuitable to be homeowners. They do not earn enough for payments and repairs, or they are simply too irresponsible.

Sun reporter John B. O'Donnell painted a devastating picture of what happens when unscrupulous speculators get their claws into people who lack a full understanding of their obligations. The con men reap huge profits overnight by reselling substandard homes at inflated prices to ill-informed buyers, who soon face foreclosure. Meanwhile, lenders end up with worthless properties and neighborhoods are scarred with more and more vacant houses.

These kinds of fraudulent sales take place in many Baltimore neighborhoods, but seem to be particularly numerous in an area north of Patterson Park. The practice is so widespread that some activists estimate $100 million worth of houses are in danger of foreclosure because they were sold to unqualified buyers.

"There are a hundred people who need to go to jail," says Andre Weitzman, a lawyer who has sued a couple of the sellers on behalf of 100 buyers. Yet only one such speculator is known to be the target of federal prosecutors.

Unscrupulous speculators could not "flip" houses for quick overnight profit without help. They are in cahoots with dishonest appraisers who violate laws and professional canons by knowingly falsifying property surveys. Some lenders also participate in the scam by not scrutinizing buyers' qualifications closely, particularly in situations in which big second mortgages should have rung warning bells.

In all this, the city has been a silent co-conspirator. Although the scam has been evident to neighborhood activists for more than a year, Mayor Kurt L. Schmoke and Housing Commissioner Daniel P. Henson III have done nothing to stop the lawbreaking speculators' nefarious activities -- or to warn gullible dreamers against falling prey to them.

The Sun's front-page report cries for swift and determined legal action. That must be accompanied by a stepped-up campaign to counsel would-be homebuyers on the opportunities, responsibilities and dangers that real estate investments present.

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